Even Brief Unemployment Can Have Long Consequences

The gloomy March jobs report from the Department of Labor includes this ominous figure: almost 500,000 Americans dropped out of the labor force, a phenomenon that picks up as people go months and even years without finding work.

But even short-term unemployment upends a family’s life. Without a paycheck to count on or benefits to cover healthcare, a visit to the doctor becomes prohibitively expensive, kitchen-table conversations about money replace meals out at restaurants, and the daily cycle of working and earning is put on hold.

Those disruptions are felt long after a person goes back to work, according to new research.

Families where one member went through even a brief bout of unemployment between 1999 and 2009 frequently spent down assets saved for retirement or their children’s education, or took on debt, compromising their long-term economic security and mobility. These families were about 30% more likely to suffer a loss of wealth during the decade than other families, according to an analysis of data from roughly 3,000 families by the Economic Mobility Project of the Pew Charitable Trusts.

In short, even a little time without a paycheck can prevent a working-class family from moving up to the middle.

The impact is even worse for families that hold few assets to begin with, a group that disproportionately includes African-Americans.

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